The ECB is having a negative interest rate. The official reason for this is that inflation is to low. Central bankers and politicians love inflation. It is a method for them to pay off the build-up debt.
This is exactly why they hate deflation. Deflation is a reward for having no debt and have wealth.
Interest rates are what you get to delay your spending. It is a reward for delayed satisfaction. As we know it is important to have the ability to delay your satisfaction. Well if you are in the world to be successful.
One of the benefits of negative interest rates is that it is profitable to be in debt. This is attractive for bankrupted banks and governments. But it is at the expense of creditors.
But the negative interest rates are not limited to central banks. Likely, consumer debt, home loans, and auto loans will soon be issued at a negative interest rate. So let’s say you borrow 100 Euro to those in need and get 98 back. What is the common sense behind losing money? Not to forget the inflation costs.
For the banking business model, it is not a big problem. Let’s say that the bank borrows from the ECB 100 Euro. The will return in payment 98 Euro. They borrow the consumer the 100. The borrower returns 99 Euro. So the banks make a profit of 1 Euro.
When the negative interest rates loans get out in the market we will see an explosion in debt. Where will the money flow to? Where will the next destruction arrive?
The result of this credit explosion will be even more bubbles. Bubbles which are going to be destructive for society.
The current monetary policy is meaning an end for the free society and free markets. Or what is left of it.